S'pore-Small-Cap-pick | JUMBO SP: Px/Tgt: SGD0.69/0.67
1. Investors that took our IPO in Nov 15 & have made an +180% outperformance over the last 17 months (from IPO 25cts to 69cts now).
2. Although we have a HOLD call, I am of the view that JUMBO SP has run its course & time to TAKE-PROFIT near 75cts:
a. Osim Chairman bought over Temasek's stake at 63cts in Jan 17
b. Share price likely to trade in a band 60-75cts with no major catalyst to punch through 80cts unless valuation expansion
c. Rich 2017 PEG of 1.6x (PE 24x vs EPS growth 15% over next 3 years).
3. Why Investors still like it albeit at lower share price:
a. Fair dividend yield of 2.5% & pay out ratio to be expanded from 40% to 50%
b. Investors are in & still nibbling because these stocks are like 'safe-harbours' & not exposed to jittery markets or bad sentiment
4. UOBKH Research has a HOLD with a slightly higher DCF based target price of S$0.67. Suggested entry price is S$0.61. However, the franchise agreements have the potential to surprise on the upside while an accelerated roll-out of new store openings from franchisees could lift our target price.
Thanks & Regards
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